Financial Sector Clean Up Sign Of Gov’t Incompetence; Group Says

A group calling itself Defunct Banks and Other Financial Institutions Network (DEBOFIN) has asserted that the financial sector clean exercise by the Akufo-Addo-led government is a sign of incompetence. 

According to the group, this action by the government has contributed to the debt stock of the country which has necessitated the need for an International Monetary Fund (IMF) Bailout and the implementation of a Domestic Debt Exchange Programme (DDEP).

From 2017 to 2019, seven indigenous banks were collapsed by the BoG, under the guise of a “Financial Sector Cleanup” exercise. 

The banks had their licences revoked with five of them merged into the Consolidated Bank Ghana.

They included UT Bank Limited and Capital Bank Limited (taken over by BoG in 2017), Unibank Ghana Limited, The Royal Bank Limited, Beige Bank LTD, Sovereign Bank Limited, Construction Bank Limited, UT Bank Limited, and Capital Bank Limited (taken over in 2018).

According to the BoG, the banks were supervised under poor corporate governance.

Additionally, the Bank of Ghana revoked the licences of 347 microfinance companies and that of 23 savings and loans and finance house companies in 2019, citing insolvency, mismanagement, and fraud in some cases, Ghanaweb reports.

The government later revealed 25 billion was used to undertake the clean-up exercise.

But DEBOFIN believes just GH¢9bn could have been used to resuscitate these financial institutions.

“Their approach in resolving the so-called mess was spending a whooping GH¢25bn to collapse our institutions instead of injecting GH¢9bn to resuscitate them in the form of liquidity support was a clear signal of incompetence and political witch hunting among others which could only be left to time to manifest.

“It was very clear after the exercise was inefficient, imprudent and wasteful use of tax payer’s money. Their actions which increased the nation’s debt stock has now come to hunt us as a country.”

With the Domestic Debt Exchange Programme, the group said the government seeks to “shift fiscal responsibility to innocent bondholders and the next government upon losing the 2024 elections but more important to them is to create fiscal space for political machinations in the interest of breaking an 8”.

Below Is The Full Statement:

We sympathize with Ghanaians the unfortunate level of deterioration and hardship the Ghanaian economy has been plunged into and the apprehension surrounding the DDEP.

A few years ago, the current economic management team described our institutions as facing insolvency, liquidity and asset quality challenges and accused our CEOs and Directors of mismanagement hence the liquidation of the banks, savings and loans, microfinance and other finance houses. Some of our CEOs and Directors are facing prosecution for various kinds of offences. The finance minister an investment banker, described our institutions as in a “zombie state”.

The regulator BOG who supervised our activities, described the financial sector as being in “a considerable state of distress” and that our continuous existence posed risk to investors. With all these descriptions, the expectation of players especially staffs of DEBOFIN who lost their jobs was a better management of the economy and the financial service sector. Their approach in resolving the so called mess was spending a whooping GH¢25bn to collapse our institutions instead of injecting GH¢9bn to resuscitate them in the form of liquidity support was a clear signal of incompetence and political witch hunting among others which could only be left to time to manifest.

It was very clear after the exercise was inefficient, imprudent and wasteful use of tax payer’s money. Their actions which increased the nation’s debt stock has now come to hunt us as a country. Fast forward 2023, the Ghanaian economy can now be described as facing a debt distress and will only take an IMF bailout to restore stability. Even that, their approach needs much to be desired in the handling of the DDEP. What they are scheming to do with the DDEP is to shift fiscal responsibility to innocent bondholders and the next government upon losing the 2024 elections but more important to them to create fiscal space for political machinations in the interest of breaking an 8.

The posture of the members of the economic management team is a situation of hopelessness. While the vice president as head of the economic management team appears unconcerned with the current economic situation and going about promising one tablet per student and others just in furtherance of his quest to lead his party. The same unbudgeted political sloganeering they did that has ended us in this quagmire.

The unsolicited and unrepentant finance minister whose services is no longer needed and can be charged with same malice as our directors and CEOs is still at post. His face at the ministry reduces investor confidence in the economy and until he is removed, confidence in our economy will be a long chase dream. He’s been left on his own by the president and is undertaking unproductive decisions of no hope. The BOG governor is aiding and abetting their unproductive policy initiatives crippling the sector.

We call on well-meaning Ghanaians, led by our two former presidents; John Agyekum Kuffour and John Dramani Mahama, the likes of Dr Kwabena Duffour, Dr Kwame Pianim, our Minority leader Dr Cassiel Ato Forson, CSO’s and academia to organize a “save our country” dialogue session reminiscent of the Senchi forum to find better ways of addressing our current predicament.

In the nut shell, it is the fervent believe of DEBOFIN that the current economic managers are getting everything about the management of the economy and financial service sector wrong and can only be described as incompetent, wasteful and leading Ghana nowhere. Their try and error approach to managing this economy is detrimental to the future of this country and the earlier we together rescue Ghana the better.

SIGNED

THOMAS AYISI KUMAH

Source: opemsuo.com/Hajara Fuseini